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On July 9, 2002, Henderson received the formal cost estimate for financial <br />warranty (FW) from the DMG. DMG's cost calculations increased the amount of the <br />FW required of Henderson from the present $10,133,000 to $54,695,000. A copy <br />of this fetter is included as Exhibit A. The DMG cost calculation spreadsheets <br />included with the letter are included by reference. <br />The referenced letter specified three options available to Henderson for reducing <br />the amount of the required FW. These options included revision of °...the <br />reclamation plan in order to reflect a reduced cost.", demonstration by Henderson <br />that some cost estimates by DMG are excessive, and performance of recamation <br />on site to reduce the FW. <br />This TR (TR-12) seeks to reduce the FW amount prior to final approval by DMG. <br />The TR discusses several specific areas for revision of the Permit and proposes <br />concomitant decreases in the FW amount required in the DMG letter. <br />This TR meets the requirements of the Minerals Rules and Regulations of the <br />Colorado Mined Land Reclamation Board (Rules) for TRs as opposed to <br />Amendments and includes discussions that respond to the issues presented in <br />Exhibit A and DMG's costing estimate package. <br />2.0 NEED FOR THE TECHNICAL REVISIQN <br />The rationale for TR-12 is twofold. First, it updates the Henderson Permit in <br />several technical areas that have been under discussion internally for some time. <br />Second, and most importantly, it utilizes those changes to more accurately adjust <br />DMG's 540 percent FW increase for Henderson. <br />As DMG is acutely aware, the face of mine reclamation and closure bonds has <br />changed dramatically over the past 7 years. Prior to approximately the mid-1990s, <br />most mineral producing interests could obtain such bonds with a simple call to <br />their insurance carriers. Premiums, although historically high, were reasonably <br />affordable. During the 1990s, and more specifically since about the mid-1990s, <br />straight insurance bonds for reclamation and closure have become increasingly <br />difficult to obtain and significantly more expensive when they can be obtained. <br />Similar to automobile insurance firms cancelling policies for excessive citations <br />2 <br />